German state bank NRW.BANK launches its first bond on the Polygon blockchain

The rise of tokenization in the banking sector is becoming increasingly evident, even in Germany.

The rise of tokenization in the banking world is becoming increasingly evident, even in Germany. NRW.BANK, the state development bank for North Rhine-Westphalia, has now issued its very first blockchain bond. That comes from an official press release.

It's a bond with a two-year term and a size of 100 million euros. The bank itself calls the issue a “milestone” in modernizing the capital markets.

For this digital leap, NRW.BANK received backing from heavyweight names like DekaBank, Deutsche Bank, and DZ Bank. The bond was issued on the Polygon blockchain, a strategic choice that Polygon itself touted on X (formerly Twitter) as a “major victory for the institutionalization of digital capital markets in Europe” View post on X.

The technical realization was handled by Cashlink, the BaFin-regulated fintech.

The German KfW Bank also showed interest. As an anchor investor, KfW was one of the first to participate. The bank has already gained experience with blockchain-based bonds. Other interested parties included Berliner Volksbank, DekaBank, Landesbank Baden-Württemberg (LBBW), Union Investment, and WI Bank.

Since 2021 it has been legally possible to issue bonds via blockchain, thanks to the Electronic Securities Act (eWpG). In 2022, the government expanded that law to include shares.

NRW.BANK's interest in tokenization isn’t new: as far back as 2019, the bank invested in a blockchain-based debt instrument. In September 2020, it followed up with its first blockchain pilot.

The message is clear: confidence in tokenization is growing, and now it’s extending to state banks.